Does Type of Fraudulent Act Have an Impact On Whistleblowing Intention?

Caesar Marga Putri

Abstract


The purpose of this research is to examine empirically the impact of two types of fraudulent act on individual’s reporting intention under reward model. This research applied the Reinforcement theory in designing whistleblowing policies. In this context, reward system in encouraging disclosure of fraudulent act was used. This study was designed using experiment method 2x2 between subjects with 86 participants from private universities. Sarbanes-Oxley Act of 2002 requires that every public company must establish anonymous channel regarding disclosure of fraudulent act. However, under the reward system it may become different prediction that non-anonymous channel is preferable than the other one. Using two types of fraudulent act, this research investigated whether those types affected individual’s intention for disclosing fraud in choosing the reporting channel because a reward is provided or not. The result shows that the interaction between the type of fraudulent act and type of channel could encourage individual’s intention to blow the whistle. However, individual prefers to report the misappropriation of asset through anonymous channel than non-anonymous even though a reward is provided.

Keywords


reward system; type of fraudulent act; whistleblowing intention

Full Text:

Download Article

References


Association of Certified Fraud Examiners (ACFE). (2005). Detecting & deterring fraud using hotlines. Continuing-education course. Austin, TX: ACFE

Ayers, S., & Kaplan, S.E. (2005). Wrongdoing by consultants: An examination of employees’ reporting intentions. Journal of Business Ethics, 57(2). 121–137. doi: 10.1007/s10551-004-4600-0

Bowen, R.M., Call, A.C., & Rajgopal, S. (2010). Whistle-Blowing: Target Firm Characteristics and Economic Consequences. The Accounting Review, 85(4), 1239-1272. doi: 10.2308/accr.2010.85.4.1239

Chiasson, M., Johnson, G.H., & Byington, J,R. (1995). Blowing the Whistle: Accountans in Industry. The CPA Journal, 65(2). 24-27.

Coram, P., Ferguson, C., & Moroney, R. (2008). Internal audit, alternative internal audit structures and the level of misappropriation of assets fraud. Accounting and Finance, 48, 543–559. doi: 10.1111/j.1467-629x.2007.00247.x

Dworkin, T. (2007). SOX and whistleblowing. Michigan Law Review, June, 1757–1780.

Dyck, A., Morse, A., & Zingales, L. (2007). Who blows the whistle on corporate fraud? CEPR discussion paper no. DP6126, SSRN. . doi: 10.3386/w12882

Dyck, A., Morse, A., & Zingales, L. (2010). Who blows the whistle on corporate fraud?. The Journal of Finance, 65, 2213–2253. doi: 10.1111/j.1540-6261.2010.01614.x

Elliston, F.A. (1982). Anonymity and Whistleblowing. Journal of Business Ethics, 1(3), 167-177. doi: 10.1007/bf00382768

Elliston, F.A. & Coulson, R. (1982). Anonymous Whistleblowing: An Ethical Analysis. Business & Professional Ethics Journal, 1(2), 39-60. doi: 10.5840/bpej19821216

Financial Accounting Standard Board. (1981). Qualitative Characteristics of accounting information (Statement of Financial Accounting Concepts No.2).

Harsha, P. D. & M. C. Knapp. (1990). The Use of Within—and Between—Subjects Experimental Designs in Behavioral Accounting Research: A Methodological Note. Behavioral Research in Accounting, 2, 50-62.

Hoque, Z. (2003). Strategic Management Accounting: Concept, Process and Issues. New Jersey: Prentice Hall.

Kaplan, S., & J. J. Schultz. (2007). Intentions to report questionable acts: An examination of the influence of anonymous reporting channel, internal audit quality, and setting. Journal of Business Ethic,71(2), 109–124. doi: 10.1007/s10551-006-0021-6

Kaplan, S., Pany, K., Samuels, J., & Zhang, J. 2009. An examination of the effects of procedural safeguards on intentions to anonymously report fraud. Auditing: A Journal of Practice and Theory, 28, 273–288. doi: 10.2308/aud.2009.28.2.273

Kaplan, S. E & Janet, K. P. (2009). An Examination of the Effects of Procedural Safeguards on Intentions to Anonymously Report Fraud. Auditing: A Journal of Practice & Theory American Accounting Association, 28, 273–288. doi: 10.2308/aud.2009.28.2.273

Kaplan, S., Pany, K., Samuels, J., & Zhang, J. (2008). An Examination of the Association Between Gender and Reporting Intentions for Fraudulent Financial Reporting. Journal of Business Ethics, 87, 15–30.doi: 10.1007/s10551-008-9866-1

King, G. 1999. The Implications of an Organization's Structure on Whistleblowing. Journal of Business Ethics, 20(4), 315-326. doi: 10.1023/a:1006028417000

Liyanarachchi, C. & Newdick, C. (2009). The Impact of Moral Reasoning and Retaliation on Whistle-Blowing: New Zealand Evidence. Journal of Business Ethics, 89, 37–57. doi: 10.1007/s10551-008-9983-x

Mismer-Magnus, F.R., & Viswesvaran, C. (2005). Whisleblowing in Organization: An Examination of Correlates of Whistleblowing Intention, Action, and Retaliation. Journal of Business Ethics, 62, 277-297.doi: 10.1007/s10551-005-0849-1

Mustafa, S. T., & Youssef, N. B. (2010). Audit committee financial expertise and misappropriation of assets. Managerial Auditing Journal, 25, 208–225. doi: 10.1108/02686901011026323

Nayir, D. Z., & Herzig, C. (2012). Value orientations as determinants of preference for external and anonymous whistleblowing. Journal of Business Ethics, 107, 197–213. doi: 10.1007/s10551-011-1033-4

Near, J. P., & Miceli, M. P. (1985). Organizational Dissidence: The Case of Whistle-Blowing. Journal of Business Ethics, 4(1), 1-6. doi: 10.1007/bf00382668

Near, J. P., & Miceli, M. P. (1995). Effective whistleblowing. Academy of Management Review, 20(3), 679-708. doi: 10.5465/amr.1995.9508080334

Ponemon, L. (1994). A Comment On ‘‘Whistle-Blowing’’ As An Internal Control Mechanism: Individual And Organizational Considerations. Auditing: A Journal of Practice & Theory (Fall Issue), 118–130.

Putri, C. M. (2012). The examination of reporting channel under structural and reward model of whistleblowing: an experimental approach. The Indonesian Journal of Accounting Research, 15, 243-258.

Robinson, S. N., Robertson, J. C., & Curtis, M. B. (2011). The effects of contextual and wrongdoing attributes on organizational employees’ whistleblowing intentions following fraud. Journal of Business Ethics, 106, 213–227. doi: 10.1007/s10551-011-0990-y

Robert Ho., (2013). Handbook of Univariate and Multivariate Data Analysis and Multivariate Data Analysis and interpretation with SPSS. UK: Chapman and Hall.

Schultz, J., Jr., Johnson, D. A., Morris, D., & Dyrnes, S. (1993). An investigation of the reporting of questionable acts in an international setting. Journal of Accounting Research, 31, 75–103. doi: 10.2307/2491165

Schultz, J. J., & Hooks, K. L. (1998). The effect of relationship and reward on reports of wrongdoing. Auditing: A Journal of Practice & Theory, 177(2), 15–35.

Seifert, D. L, Sweeney, J. T., Joireman, J, & Thornton, J,M. (2010). The influence of organizational justice on accountant whistleblowing. Accounting, Organization, and Society, 35, 707-717. doi: 10.1016/j.aos.2010.09.002

Lestari, R & Yaya, R., (2017). Whistleblowing dan Faktor-Faktor yang mempengaruhi Niat Melaksanakanya oleh Aparatur Negara Sipil. Jurnal Akuntansi, 21(3), 336-350. doi: 10.24912/ja.v21i3.265

Xu, Y., & Ziegenfuss, D. (2008). Reward systems, moral reasoning, and internal auditors’ reporting wrongdoing. Journal of Business Psychology, 22, 323–331. doi: 10.1007/s10869-008-9072-2




DOI: https://doi.org/10.18196/jai.1902102

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Office:
Ruang Jurnal Fakultas Ekonomi dan Bisnis UMY
Gedung Ki Bagus Hadikusuma (E4) Lantai 2, Kampus Terpadu Universitas Muhammadiyah Yogyakarta,
Jalan Brawijaya (Lingkar Selatan), Tamantirto, Kasihan, Bantul, Daerah Istimewa Yogyakarta, Indonesia, 55183
Website: journal.umy.ac.id/index.php/ai - E-mail: jai@umy.ac.id

Journal of Accounting and Investment is licensed under Creative Commons Attribution Attribution-NonCommercial-NoDerivatives 4.0 International License

View My Stats